Rates are still on the rise now cresting 7% for a 30 year fixed conforming loan. This is changing the home search for many buyers who are now taking some time to evaluate what their next real estate transition looks like. Buyers are still looking, but the level of demand from buyers to get into a property has reduced now that rates are higher than they were, and there seems to be a common sentiment of “what happens next?” We are quite sure rates are going to go up again, but despite these changes we are noticing some good patterns. Properties that are well priced in great locations are still selling quickly, and buyers who can overcome these rate hikes are making good purchases that they may not have been able to make during the last couple of years of Covid when there was so much competition in the market. What we’re finding is a balanced market where it takes more time to match a buyer and a seller. This can feel like a drastic shift from the obvious seller’s market the Monterey Peninsula has been these last few years, but Carmel is a resilient market. We have the stunning coastline and scenery that buyers from all over the world aspire to live in, and now with work from home flexibility, this has become more and more of a reality. Although there is talk of rates continuing to go up, we still have such limited supply. Here is a graph showing inventory levels over the last three years.
Many homeowners either bought or refinanced when they had the opportunity to get 2-4% interest rates fixed for 30 years, so the idea of trading up now requires a more expensive home than what they bought at about double the interest rate. Some homeowners are content with what they have and are waiting to see what happens with the market. At 7% rates are still not historically abnormal, but this was a rapid increase from 3% just a few months ago, and it has created tension. We are encouraging buyers to prioritize location with the understanding that we live in a great market to own real estate! We continue to assist our sellers in providing a great disclosure package for their interested buyers, and great marketing to attract their target audiences.